1. Pertemuan 6 Akuntansi Keuangan 1 Rudy Suryanto, SE.,M.Acc.,Ak
PIUTANG DAGANG
Pertemuan 6
Akuntansi Keuangan 1
Rudy Suryanto, SE.,M.Acc.,Ak

2. Written promises to pay a sum of money on a specified future date.
Receivables
Claims held against customers and others for money, goods, or services.
Oral promises of the purchaser to pay for goods and services sold.
Written promises to pay a sum of money on a specified future date.
Accounts Receivable
Notes Receivable
LO 3 Define receivables and identify the different types of receivables.

3. Receivables Nontrade Receivables Examples:
Advances to officers and employees.
Advances to subsidiaries.
Deposits to cover potential damages or losses.
Deposits as a guarantee of performance or payment.
Dividends and interest receivable.
LO 3 Define receivables and identify the different types of receivables.

4. Recognition of Accounts Receivables
Trade Discounts
Reductions from the list price
Not recognized in the accounting records
Customers are billed net of discounts
10 % Discount for new Retail Store Customers
LO 4 Explain accounting issues related to recognition of accounts receivable.

5. Recognition of Accounts Receivables
Cash Discounts
Inducements for prompt payment
Gross Method vs Net Method
Payment terms are 2/10, n/30
LO 4 Explain accounting issues related to recognition of accounts receivable.

6. Recognition of Accounts Receivables
Example: On June 3, Benedict Corp. sold to Chester Inc., merchandise having a sale price of $5,000 with terms of 2/10,n/60, f.o.b. shipping point. On June 12, Benedict received a check for the balance due from Chester. Prepare required journal entries assuming Benedict records the sale at gross.
Gross Method
June 3
Accounts receivable 5,000
Sales 5,000
June 12
Cash ($5,000 x 98%) 4,900
Sales discounts
Accounts receivable ,000
LO 4 Explain accounting issues related to recognition of accounts receivable.

7. Recognition of Accounts Receivables
Example: On June 3, Benedict Corp. sold to Chester Inc., merchandise having a sale price of $5,000 with terms of 2/10,n/60, f.o.b. shipping point. On June 12, Benedict received a check for the balance due from Chester. Prepare required journal entries assuming Benedict records the sale at net.
Net Method
June 3
Accounts receivable 4,900
Sales 4,900
June 12
Cash 4,900
Accounts receivable 4,900
LO 4 Explain accounting issues related to recognition of accounts receivable.

8. Recognition of Accounts Receivables
Example: On June 3, Benedict Corp. sold to Chester Inc., merchandise having a sale price of $5,000 with terms of 2/10,n/60, f.o.b. shipping point. On June 29, Benedict received a check for the balance due from Chester. Prepare required journal entries assuming Benedict records the sale at net.
Net Method
June 3
Accounts receivable 4,900
Sales 4,900
June 29
Cash 5,000
Accounts receivable 4,900
Sales discounts forfeited 100
LO 4 Explain accounting issues related to recognition of accounts receivable.

9. Recognition of Accounts Receivables
Nonrecognition of Interest Element
A company should measure receivables in terms of their present value.
In practice, companies ignore interest revenue related to accounts receivable because the amount of the discount is not usually material.
LO 4 Explain accounting issues related to recognition of accounts receivable.

10. Accounting for Accounts Receivable
How are these accounts presented on the Balance Sheet?
Allowance for Doubtful Accounts
Accounts Receivable
Beg
Beg.
End
End.
LO 4 Explain accounting issues related to recognition of accounts receivable.

11. Less allowance for doubtful accounts 25 475 Inventory 812
Assets
Current Assets:
Cash $ 346
Accounts receivable 500
Less allowance for doubtful accounts
Inventory
Prepaids _ 40
Total current assets ,673
Fixed Assets:
Office equipment ,679
Furniture & fixtures ,600
Less: Accumulated depreciation (3,735)
Total fixed assets ,544
Total Assets $10,217
LO 4 Explain accounting issues related to recognition of accounts receivable.

12. Accounts receivable, net of $25 allowance for doubtful accounts 475
Assets
Current Assets:
Cash $ 346
Accounts receivable, net of $25 allowance
for doubtful accounts
Inventory
Prepaids _ 40
Total current assets ,673
Fixed Assets:
Office equipment ,679
Furniture & fixtures ,600
Less: Accumulated depreciation (3,735)
Total fixed assets ,544
Total Assets $10,217
LO 4 Explain accounting issues related to recognition of accounts receivable.

13. Accounting for Accounts Receivable
Journal entry for credit sale of $100?
Accounts receivable 100
Sales
Allowance for Doubtful Accounts
Accounts Receivable
Beg
Beg.
End
End.
LO 4 Explain accounting issues related to recognition of accounts receivable.

14. Accounting for Accounts Receivable
Journal entry for credit sale of $100?
Accounts receivable 100
Sales
Allowance for Doubtful Accounts
Accounts Receivable
Beg
Beg.
Sale
End
End.
LO 4 Explain accounting issues related to recognition of accounts receivable.

15. Accounting for Accounts Receivable
Collected of $333 on account?
Cash
Accounts receivable
Allowance for Doubtful Accounts
Accounts Receivable
Beg
Beg.
Sale
End
End.
LO 4 Explain accounting issues related to recognition of accounts receivable.

16. Accounting for Accounts Receivable
Collected of $333 on account?
Cash
Accounts receivable
Allowance for Doubtful Accounts
Accounts Receivable
Beg
Beg.
Sale
Coll.
End
End.
LO 4 Explain accounting issues related to recognition of accounts receivable.

17. Accounting for Accounts Receivable
Adjustment of $15 for estimated Bad-Debts?
Bad debt expense 15
Allowance for Doubtful Accounts 15
Allowance for Doubtful Accounts
Accounts Receivable
Beg
Beg.
Sale
Coll.
End
End.
LO 4 Explain accounting issues related to recognition of accounts receivable.

18. Accounting for Accounts Receivable
Adjustment of $15 for estimated Bad-Debts?
Bad debt expense 15
Allowance for Doubtful Accounts 15
Allowance for Doubtful Accounts
Accounts Receivable
Beg
Beg.
Sale
Coll.
Est.
End
End.
LO 4 Explain accounting issues related to recognition of accounts receivable.

19. Accounting for Accounts Receivable
Write-off of uncollectible accounts for $10?
Allowance for Doubtful accounts 10
Accounts receivable 10
Allowance for Doubtful Accounts
Accounts Receivable
Beg
Beg.
Sale
Coll.
Est.
End
End.
LO 4 Explain accounting issues related to recognition of accounts receivable.

20. Accounting for Accounts Receivable
Write-off of uncollectible accounts for $10?
Allowance for Doubtful accounts 10
Accounts receivable 10
Allowance for Doubtful Accounts
Accounts Receivable
Beg
Beg.
Sale
Coll.
Est.
W/O
W/O
End
End.
LO 4 Explain accounting issues related to recognition of accounts receivable.

21. Accounts receivable, net of $30 allowance for doubtful accounts 227
Assets
Current Assets:
Cash $ 346
Accounts receivable, net of $30 allowance
for doubtful accounts
Inventory
Prepaids _ 40
Total current assets ,673
Fixed Assets:
Office equipment ,679
Furniture & fixtures ,600
Less: Accumulated depreciation (3,735)
Total fixed assets ,544
Total Assets $10,217
LO 4 Explain accounting issues related to recognition of accounts receivable.

22. Valuation of Accounts Receivable
Reporting Receivables
Classification
Valuation (net realizable value)
Uncollectible Accounts Receivable
Sales on account raise the possibility of accounts not being collected
LO 5 Explain accounting issues related to valuation of accounts receivable.

23. Uncollectible Accounts Receivable
Methods of Accounting for Uncollectible Accounts
Direct Write-Off
Theoretically undesirable:
no matching
receivable not stated at net realizable value
Allowance Method
Losses are Estimated:
Percentage-of-sales
Percentage-of-receivables
LO 5 Explain accounting issues related to valuation of accounts receivable.

24. Uncollectible Accounts Receivable
Percentage of Sales
Matching
Sales --- Bad Debt Expense
Income Statement Approach
Percentage of Receivables
Net Realizable Value
Receivables - Allowance for Bad Debt
Balance Sheet Approach
LO 5 Explain accounting issues related to valuation of accounts receivable.

25. Uncollectible Accounts Receivable
Example Data
Credit sales $500,000
Estimated % of credit sales not collected 1.25%
Accounts receivable balance $72,500
Estimated % of A/R not collected %
Allowance for Doubtful Accounts:
Case I $150 (credit balance)
Case 2 $150 (debit balance)
LO 5 Explain accounting issues related to valuation of accounts receivable.

26. Uncollectible Accounts Receivable
Percentage of Sales Method
Charge sales $500,000
Estimated percentage x %
Estimated expense $ 6,250
===================================================
What should the ending balance be for the allowance account? -- Case 1 and Case 2
LO 5 Explain accounting issues related to valuation of accounts receivable.

27. Uncollectible Accounts Receivable
Percentage of Sales
Case 1
Case 2
Actual balance (credit)
(150)
150
Adjustment
(6,250)
(6,250)
Ending balance
(6,400)
(6,100)
Journal entry:
Bad debt expense 6,250
Allowance for doubtful accounts 6,250
LO 5 Explain accounting issues related to valuation of accounts receivable.

28. Uncollectible Accounts Receivable
Percentage of Receivables
Accounts receivable $ 72,500
Estimated percentage x %
Desired balance $ 5,800
===================================================
What should the ending balance be for the allowance account? -- Case 1 and Case 2
LO 5 Explain accounting issues related to valuation of accounts receivable.

29. Uncollectible Accounts Receivable
Percentage of Receivables
Case 1
Case 2
Actual balance (credit)
(150)
150
Desired balance
(5,800)
(5,800)
Adjustment
(5,650)
(5,950)
Journal entry – Case 1:
Bad debt expense 5,650
Allowance for doubtful accounts 5,650
LO 5 Explain accounting issues related to valuation of accounts receivable.

30. Uncollectible Accounts Receivable
Percentage of Receivables
Case 1
Case 2
Actual balance (credit)
(150)
150
Desired balance
(5,800)
(5,800)
Adjustment
(5,650)
(5,950)
Journal entry – Case 2:
Bad debt expense 5,950
Allowance for doubtful accounts 5,950
LO 5 Explain accounting issues related to valuation of accounts receivable.

31. Uncollectible Accounts Receivable
Summary
Percentage of Sales approach:
Bad debt expense estimate is related to a nominal account (Sales), any balance in the allowance account is ignored.
Therefore, the method achieves a proper matching of cost and revenues.
Percentage of Receivables approach:
Results in a more accurate valuation of receivables on the balance sheet.
Method may also be applied using an aging schedule.
LO 5 Explain accounting issues related to valuation of accounts receivable.

32. Recognition of Notes Receivable
Supported by a formal promissory note.
A negotiable instrument
Maker signs in favor of a Payee
Interest-bearing (has a stated rate of interest) OR
Noninterest-bearing (interest included in face amount)
LO 6 Explain accounting issues related to recognition of notes receivable.